What is a Conduit IRA?
A conduit IRA is a separate IRA (i.e., non-commingled) account established to receive a distribution from a qualified plan having certain characteristics worth preserving. A good example is a rollover from a 403(b) Tax-Sheltered Annuity into an IRA. Such an IRA may be rolled back into a 403(b) account at a later date, as long as it has not been commingled with any other IRA monies. A conduit IRA preserves the flexibility to roll the monies back into the original plan and take advantage of loans or other features not available in an IRA. There are no special requirements to establish a conduit IRA. It is only necessary to ensure that the monies are not commingled with any other IRA monies.
Conduit IRAs are individual retirement accounts that are used to temporarily house funds that are distributed from a qualified retirement plan. Sometimes referred to as a Rollover IRA, the Conduit IRA is a helpful device for storing the funds accumulated in a retirement plan of a former employer while a new and permanent arrangement is put in place for those funds. A Conduit IRA should never be viewed as a permanent solution, however, and there are limits on the amount of time funds may reside in IRAs of this type. One of the easiest ways to understand how a Conduit IRA functions is to think in terms of a long time employee who has paid into a 401(K) plan as part of his or her overall retirement plans. Rather than remaining with the employer until reaching retirement age, the individual chooses to secure employment with another firm. In many cases, full benefits are deferred until the new employee completes his or her probation period. This often means that the new hire will not be eli
A conduit IRA is a separate IRA (i.e., non-commingled) account established to receive a distribution from a qualified plan having certain characteristics worth preserving. A good example is a rollover from a 403(b) Tax-Sheltered Annuity into an IRA. Such an IRA may not be rolled back into a 403(b) account at a later date if your funds have been commingled with other IRA monies. A conduit IRA preserves the flexibility to roll the monies back into the original plan and take advantage of loans or other features not available in an IRA. There are no special requirements to establish a conduit IRA. It is only necessary to ensure that the monies are not commingled with any other IRA monies.
by Jim Bedsole, BOL Guru Guru Bio Question: I would like to know what a conduit IRA is and if this account is something to which the customer may contribute? Answer: A quick Google search on “Conduit IRA” reveals the following from InvestorWords.com: Definition: A separate IRA established pursuant to a rollover from a qualified retirement plan. No intermingling of other funds such as regular (non-rollover) IRA contributions is permitted. Money in a conduit IRA may be rolled into a new employer’s plan (if allowed), thereby preserving any favorable tax treatment associated with the distribution. There is no limit on the contributions transferred to a conduit IRA.
